Tesla Motors

The Missouri Court of Appeals has ruled that the electric car maker Tesla can be granted a license to sell cars in the state.

A three-judge panel ruled Tuesday that the association representing Missouri car dealers did not have the right to sue Tesla, and dismissed the case. The ruling means Tesla can apply to renew licenses for its two Missouri stores, and potentially expand across the state.

With Tesla electric cars parked in front of the Missouri Capitol, legislators have found themselves in an unexpected battle over a provision in a Senate bill that the automaker says would effectively kill its Missouri operations.

The provision would prohibit vehicle manufacturers, such as Tesla Motors, from selling products directly to customers -- requiring them instead to set up dealerships.